Brookfield Corp (BN.TO)

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research.

Lower interest rates are certainly more helpful to the Brookfield group. 
The company has a massive amount of capital to deploy. 
If valuations continue to fall, we would expect a lot of deals. 
Higher rates of course lower the potential return on deals, but if valuations are lower then this becomes a bit of a wash. 
The spin out should create value over time. Both companies have predicted fairly high growth rates, and BAM intends to pay out most cash flow in rising dividends. 
The value creation over the past 20 years has been nearly the best in Canada, and we would expect BN to survive this current market/economic scenario fairly well. 
The stock is going to bounce around, but it is not really a company we 'worry' about too much. It has proven itself time and time again.  
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Anything Brookfield: sell. It needs lots of liquidity, and liquidity is being drawn out of this market. The macro runs counter to Brookfield. He model $40.17, which is exactly where shares trades. Pays a small dividend; Brookfield needs to increase this.

The people running it are very bright and are great at creating shareholder value. They are masters at buying up and using debt. They had two defaults on holdings in California but they knew what they were doing and it was not a problem for them financially.

Very strong company.
Recent pullback has driven shares lower.
Excellent assets for the value oriented investor.
Potential upside around 26% could be expected.
Good long term investment. 
Strong balance sheet. 

In line with a lot of areas of the market, starting to see signs of stabilization. Chart shows a double-bottom taking hold. Most stocks saw weakness in December, a strong rally in January, and a pullback through all of February. Doesn't mind adding exposure here. If we break below the double-bottom lows, look to reduce exposure.

Real estate is going to be challenged. BN is primarily in the property business, which is still booming. Interest rates will be an issue, but it may take 5-10 years to be felt by the big players. Inflation and interest rates will change how people value properties. Work from home won't have as big an impact as believed. 

For growth. A lot to like in terms of maximizing value of assets. BN at the top of the pyramid has some unique arbitrage opportunities among the different assets. Strategic capital allocation benefits. More of a growth orientation, so it retains capital, with a yield of only 0.8%. Shareholder focused. He's quite positive on them.

It's become so complicated. He likes simple, transparent, and can I analyze it? In this environment where interest rates have moved so fast, he doesn't know what credit events are coming. He's standing back. It's a yellow flag right now. Instead, he owns BIP.UN and BEP.UN.

BN vs. BAM

He prefers holding the original Brookfield, whose discount to NAV is steeper than the asset management company. If you want exposure to infrastructure, utilities, etc. then he prefers BN to BAM.

It was downgraded today with investors worried about real estate in Brookfield Corp - BPY. It will probably clean it up and re-buy. It has great assets

Yield is around 1.5%, the lowest in the group. You have to evaluate each company separately. He owns BEP.UN and BIP.UN, as he finds those the most attractive long term. With those two, you tap into the Brookfield global, private equity expertise, with a focus on renewables and infrastructure. BN owns a lot of real estate. BAM is asset management. A complicated structure. You have to analyze the risk/reward to see what's right for you. He's not willing to take that much risk for the top of the house at such a low dividend. One thing is there's been more of a shift in office properties and vacancies post-Covid. Absent a significant change in interest rates or lessening of geopolitical issues, we're heading into a weakening economy. If you have a more positive view on real estate than he does, you may want to look at BN.

Big success story. Parent company. Focused on compounding capital by investing in high-quality investments. Revenue from real estate, private equity, infrastructure, renewables. Expects the smaller dividend yield, because what he wants is capital appreciation. Global powerhouse. Shares came down last year due to rising interest rates and macro headwinds. Good time to buy for the long term. Yield is 1.56%.